FAQ

What is the Tip Credit?

Federal law and most states allow tipped workers to be paid a lower minimum wage, as long as they earn at least the full minimum wage when tips are included. (The difference between the tipped wage and the full minimum wage is called the "tip credit.") Service workers are guaranteed to earn at least the minimum wage per hour during any pay period; if tips plus the tipped wage does not equal at least the current minimum wage, then businesses are legally required to make up that amount. With the current model, most servers and bartenders make well above the minimum wage when their tips are included.

Why is the tip credit important for restaurant workers?

One of the consequences of steeper wage mandates and in turn higher costs to guests is a change to the business model. To maintain a comparable out-of-pocket price point for our customers, some restaurants in cities that are approaching $15 with no tip credit are using “service included” models. With these models, guests are told that the traditional tip is no longer necessary because the higher wage is included in the price of the food, or included in the charge at the bottom of the bill.

Why is the tipping status quo preferred?

The restaurant industry in America is unique, and survey data proves that both tipped workers and the public prefer it as well. Restaurant workers often look at ourselves as commission-based sales people--the more we sell the more we make. In addition, we are rewarded when we give guests exceptional experiences. Our guests appreciate that they can show their satisfaction through tipping; it is a way to show their respect for us executing our craft. Far from being demeaning, as some activist organizations have claimed, the tipping system is empowering for servers and bartenders.

How can hourly workers get more involved?

First and foremost, restaurant servers should become a member and join our fight here on our website. Sending us a testimonial about why you prefer and rely on tip culture and how the service industry has had a positive impact on your life is a great place to start. It is also important to reach out to your local legislators and share with them how important the tip credit is to you and our industry. Also, share our website and Facebook page with all your industry friends. It’s important to educate everyone that we prefer tip culture and the tipping status quo. Letting all your friends know that the tip credit is supported by the workers is how we will best spread our message.